The Committee for Economic Development of the National Assembly got acquainted with the proposal of the Organic Law on dealing with internal armed conflicts, social and economic crisis, which proposes to increase the rate of value added tax (VAT) from 12 percent to 15 percent.

The initiative presented by President Daniel Noboa seeks to raise funds to finance security measures in the context of the declaration of internal armed conflict, as well as actions to deal with the economic and social crisis.

The committee met on Monday afternoon, January 15, after the Legislative Administrative Council (CAL) qualified the bill last Sunday.

The President of the Commission, Valentina Centeno, from the ruling bench of the ADN, reported that from Wednesday the 17th, they will be in permanent session to receive the speeches of the state ministers.

Centeno defended the executive branch’s proposal because funds are needed to address the fight against terrorism. And he reminded that in the past, other leaders also resorted to increasing VAT in order to finance new situations.

In this sense, he stated that the support expressed at the plenary session of the Assembly to Executive Decree 111 – which declared the state of internal armed conflict – must be “real support”, which goes beyond the photo.

The aforementioned support must be translated into support for measures to obtain the necessary funds, he said. He explained that “the government is open to receiving different proposals as long as they are useful”.

“War has a direct and indirect cost,” said the member, highlighting the figures from the actions carried out by the Armed Forces and the National Police in recent days. He pointed out that a total of 15,661 operations were carried out, 1,534 were arrested, 27 prisoners who escaped from prison were recaptured, and 11 kidnapped policemen and prison guides who were detained in prisons were released.

Other members of the Committee criticized that the bill does not establish an exact time frame for the tax increase; That is, they asked the question whether the increase is permanent.

In addition, they suggested that Government bodies that go to the legislative table provide concrete figures of collection projections, the estimated amount of costs of internal armed conflict, the economic impact on citizens and productive sectors, as well as alternatives for obtaining resources in other ways.

Representative Blasco Luna, from the Civil Revolution (RC) group, criticized that the bill does not state how much it will cost to equip the armed forces and the national police to deal with the internal conflict. He said that it is necessary to look for other alternatives.

“Why do people have to continue paying for the crises experienced by the country and 2% of the population, but not by large economic groups? The increase in VAT is a tax that affects all citizens, but mostly the stratum of the population, the stratum of the poor,” said Luna.

Pedro Velasco (Avanza) mentioned that the norm that is now being analyzed must specify the temporality, the goal of the collection. He said he should look for additional funding mechanisms, such as asset forfeiture laws or “think and take the bull by the horns” and make progress on targeting fuel subsidies. And to implement the collection of monetary and economic sanctions in court judgments for corruption crimes.

Velasco recalled that in 2016, the then president Rafael Correa raised two points of VAT, to 14%, for one year, in order to solve the emergency situation due to the earthquake in Manabí and Esmeraldas, but that there was a malicious spending of the collected funds and that’s why criminal proceedings are underway.

For her part, Adriana García (Gente Buena) expressed her support for the positive decisions of President Daniel Noboa, as was the case with the first two economic laws he presented. But he said that the intention to increase VAT to 15 percent is not supported now.

“These three points would drastically affect the citizens,” García emphasized and suggested that the portfolio of electric companies and other public services can be recovered, the percentage of income that banks have can be determined and Petroecuador’s contracts with contractors can be renegotiated. foreign.

According to the tax collection impact report attached to the bill, the VAT increase will generate an increase in tax collection of $1.306 million annually.

But this year, $1.071 million will be collected, the report said, since the rule will take effect on March 1.